The income statement Flashcards
What is the formula for profit
Total revenue - total costs
What are the three types of profit
Gross profit, operating profit and net profit
What is an income statement
A formal financial document that summaries a businesses trading activities and expenses to show whether it has made a profit or loss
What is sales revenue
Money coming in from sales = quantity sold x selling price
What is cost of sales
Costs directly linked to the production of the goods or services sold
What is gross profit
Sales revenue - cost of sales
What are other operating expenses
All other costs associated with the trading of the business
What is operating profit
Gross profit - expenses
What are exceptional items
Any unusually large or infrequent transactions
What is net profit
Operating profit - interest and taxation
How can profit be increased
Same quantity at a higher price, more at the current price or same at the same price but reduce costs
